Two women wearing t-shirts with the US flag walks along a street of Havana, on April 13, 2015. Photo: AFP

President Barack Obama is set to remove Cuba from a list of state sponsors of terrorism, in a landmark step paving the way towards restoring ties frozen for five decades.

Obama on Tuesday notified Congress of his "intent to rescind" Cuba's inclusion on the blacklist, after a lengthy review launched late last year as Washington openly began a rapprochement with its Cold War foe.

US lawmakers now have 45 days to oppose the move; otherwise, it will go ahead, removing a key hurdle to renewing US diplomatic relations with the communist authorities in Cuba.

"The government of Cuba has not provided any support for international terrorism during the preceding six-month period," Obama wrote to US lawmakers to justify his decision, after what administration officials called "a rigorous process" done with "every caution and every care."

Cuba described the move as "fair" and said that it should never have been on the list.

It comes just three days after Obama held a historic hour-long meeting with his Cuban counterpart Raul Castro on the sidelines of a weekend summit in Panama, the first face-to-face talks between the presidents of the two nations in half a century.

Cuba was added to the terror list in 1982, and its removal would leave only Iran, Sudan and Syria still on the blacklist.

"Cuba was originally designated as a state sponsor of terrorism because of its efforts to promote armed revolution by forces in Latin America. Our hemisphere, and the world, look very different today than they did 33 years ago," Secretary of State John Kerry said.

No date to open embassies

If it is struck from the list, Cuba will again have access to the US banking system, and other restrictions such as a ban on US assistance as well as arms exports and sales will be lifted.

Cubans overwhelmingly welcomed the decision.

"This is super-positive and a brave gesture by Obama, although Cuba never should have been on the list in the first place," said 68-year-old retired actress Glice Farinas in Havana.

But US officials cautioned other sanctions imposed under a US economic embargo will remain in place. Cuba has called for an end to the embargo's stranglehold.

Talks continue on trying to re-establish diplomatic ties, which would allow for a reopening of embassies in each country, with Kerry eager to make a historic trip to the Caribbean island to reopen the US mission there.

No date has been set for new talks yet, and after three rounds of negotiations, officials cautioned there "may be a little more confidence building needed, but we'll get there."

Washington is calling for US diplomats to be able to move around freely in Cuba and meet with dissidents, without any constraints by Cuban authorities.

"We need the embassy to function the way embassies function around the world. We are going to continue to pursue those requirements," a senior administration official told reporters.

The official added however that it was believed that Cuba was in the process of finalizing a deal with a bank so its interests section in Washington -- which would become the embassy -- has access to the banking system.

"Cuba is a state sponsor of terrorism. They harbor fugitives of American justice, including someone who killed a police officer in New Jersey over 30 years ago," Rubio said in a statement.

Rubio and Jeb Bush, who are both considered frontrunners to win the party's presidential nomination, have deep support in Florida's powerful Cuban exile community.

And Republican lawmaker Ed Royce, the chairman of the House foreign affairs committee, accused the White House of "taking another big step closer to the Castro regime without consulting Congress," adding the review process looked "rushed."